Dragon comes out a winner after smelling something fishy Volatility is not always an investor's best friend. In fact, the kind of volatility we have seen this month has been a nightmare for everyone, professional investors included. On the anniversary of the Hang Seng Index briefly breaching the 32,000 barrier, the blue-chip index closed at 14,329.85 yesterday despite a 12.82 per cent bull run. With these figures in mind, it is safe to assume that most hedge funds worldwide have been trimmed by more than 60 per cent. However, we came across a local hedge fund firm, Imperial Dragon Asset Management, that has recorded a positive year-to-date return, probably the only one in town to achieve such a feat. Since launching on October 4 last year with a name to reflect the mood of the markets at the time, the Imperial Dragon fund's net asset value is up 88.5 per cent, ranking it No1 by annualised returns according to Eurekahedge, which measures such performances. Imperial Dragon partner Dale Tsang puts the success down to the old saying of knowing when to sell a stock is as important as knowing when to buy. 'When we smell something isn't right, we flee, Luckily, because of our size, we don't need to fall in love with stocks,' he said. Luck was also on his side when his firm almost chose Lehman Brothers as its custodian bank. The former Morgan Stanley sales head says he still has sleepless nights thinking about what could have happened if it had not chosen Deutsche Bank instead. Rumour control Speculative stories about various Hong Kong businessmen being exposed to toxic investment products such as the 'accumulator' have appeared on front pages around town this week, but one second-generation tycoon is determined to put a stop to the rumour mill. Hopewell Holdings managing director Thomas Jefferson Wu Man-sun has offered HK$1 billion to anyone who can provide him with evidence of his involvement in an accumulator, after his family was featured in a Next magazine cover story about tycoons floundering amid the financial crisis. Hopewell declared a second special dividend of HK$3.30 a share for this month, which raised eyebrows about why the majority Wu family was being so generous. The family is poised to make HK$800 million from the extra dividend, which would just about cover young Thomas' offer. Bullish thoughts As has been ably demonstrated over the past few weeks, predicting market movements is anything but a science. The so-called experts have as much clue about what is going to move an index as Joe Punter. That is why we are prepared to go along with a suggestion received yesterday that we resort to the power of positive thought. It came from art gallery owner Heena Mir, who is about to launch an exhibition by renowned Indian artist HR Das entitled The Bull Series. Ms Mir points out that as the bears are due to go into hibernation in the northern hemisphere and the Chinese Year of the Ox is just around the corner, 'it is time to change fortunes around and start thinking positive. Get the bulls in and get people to cheer up especially with the festive season nearing us'. It may be a blatant plug for her November 10-30 show at the Wyndham Street gallery, but we like the sentiment. Portals clash Things have turned sour between two mainland portals after Alibaba dropped its advertising contract with Baidu. In a press release, Alibaba said the termination was due to the deteriorating quality of Baidu's traffic, which did not fit in with its demographic of small to medium-sized enterprises. Baidu hit back yesterday saying it understood Alibaba's decision since the company's shares had plummeted 90 per cent from its initial public offering price. It then twisted the knife by adding that internet firms which could not create value for customers would face big challenges or even shut down in the wake of the financial meltdown. The war of words is better understood in the light of the bitter behind-the-scenes battle between Alibaba's online auction site Taobao and Baidu's Youa.